Arc Energy Makes Another Perth Basin Discovery

ARC Energy reports that it has made a discovery with its Eremia 1 well in the northern Perth Basin after wireline logging was completed last night. The well will now be deepened to test the other targets below the oil bearing main objective.

ARC has 50% of Eremia and is the operator. Origin Energy holds the remaining 50%. Eremia is only 2.5 kilometers from ARC's Hovea Field which is currently producing in excess of 3,500 barrels of oil per day.

Mr. Eric Streitberg, Managing Director of ARC said: "We are delighted with the results so far, which as well as being the discovery of yet another commercial oilfield in the onshore part of the northern Perth Basin, are a conclusive demonstration of the prospectivity of ARC"s acreage.

There have now been three oil discoveries and a gas discovery in a row in the immediate onshore area. This is an outstanding success rate and is particularly exciting as ARC currently maps up to another 20 leads and prospects in the area and is confident more success will follow.

The discovery of another oilfield comes shortly after we reported a profit of $2.2 million for the half year to 31 December 2002 which was a dramatic increase from the profit of the previous corresponding period of $0.13 million.

We also have demonstrated our ability to get these fields on to production in record time. Our nearby Hovea field has been safely transformed from a greenfields site into a production facility with a handling capacity of in excess of 5,000 barrels of oil per day in less than six months, with total production from Hovea now over 300,000 barrels of oil.

It is particularly satisfying to be able to add considerable value to our business by developing real tangible assets and to show a very healthy profit from doing so."